A comprehensive Lifecycle Benefit Cost Analysis is essential to illuminate the real value of freight rail projects—and ensure their success.
With the current economic downturn and widespread unemployment, fiscal stimulus in the form of transportation infrastructure investment is expected to inject trillions of dollars into the U.S. economy over the next few years. All infrastructure investments drive short-term jobs and economic activity. But too many are planned without consideration of their long-term impacts. There needs to be an imperative to invest in rail projects that support long-term prosperity, and sustained benefits to society and the environment.
Freight railroads are a critical backbone of the U.S. economy, supporting the communities they serve with efficient goods movement. The return on investment in infrastructure will be enhanced by the prioritization of projects that generate the greatest benefit for every dollar spent. Widely employed as a requirement of federal grant programs, the standard Benefit Cost Analysis accounts for only a subset of the benefits and costs. The practice of Benefit Cost Analysis needs a reset to embrace the full lifecycle of each project’s commercial, community and environmental impacts. Benefit Cost Analyses that are completed to meet grant application requirements are rarely used to refine the underlying project design and improve its long-term impact on the community and the environment.
Improving Project Buy-In
With massive funding for infrastructure investments on the table, freight rail projects will gain more attention from grant-makers, planners and the public when presented with a comprehensive picture of project benefits. Thus, infrastructure owners and operators must take a more holistic approach to developing and then investing in projects that deliver the fullest set of private and public benefits.
Full Lifecycle Benefit Cost Analysis assigns dollar values to all project benefits, whether they are social, environmental or financial. The strongest business case presents the broadest array of cost and benefit factors available in a data-grounded, mathematically rigorous light. OnTrackNorthAmerica’s (OTNA) Land Freight Lifecycle Project, with assistance from consulting partner Autocase and the University of Tennessee, has begun gathering data on more than 30 lifecycle impact factors, so the full benefits of rail transportation can be comprehensively assessed, measured and understood.
Standard cost factors as required by the U.S. Department of Transportation (USDOT) include initial construction, operations and maintenance. Standard benefits include the value of travel time savings, greenhouse gas and air contaminants reduction, and improvements in traffic safety. Using these as a starting point is good. To deliver the best case for the future of North America’s transportation networks, however, all elements influencing the Benefit Cost Analysis must be considered. Other factors to be included in “Lifecycle” Benefit Cost Analysis that meet the challenges of the 21st century with energy-efficient, space efficient and capital-efficient rail transportation include, but are not limited to: the enhancement of the livability of communities from better infrastructure and advancement of opportunities for disadvantaged persons through increased connectivity. These additional factors not only expand the USDOT requirements, but also present a compelling methodology that will win more grants and ensure project success.
— In recent years, community opposition due to incomplete messaging has blocked rail infrastructure projects all over North America. The most effective Lifecycle Benefit Cost Analyses are presented with nuance and realism, forming the core of productive stakeholder engagement. —
Additional environmental factors include the impact of end-of-life vehicles; the quantifiable quality-of-life impacts of noise from engine, rolling stock and aerodynamics; the land opportunity cost in the form of track or lane-miles required to move a given tonnage; the contamination of adjacent wildlife and natural environment; and the impact of light pollution on a community, including vegetation/crops and wildlife. This broader list of factors presents a truer picture of project impacts.
In recent years, community opposition due to incomplete messaging has blocked rail infrastructure projects all over North America. The most effective Lifecycle Benefit Cost Analyses are presented with nuance and realism, forming the core of productive stakeholder engagement. Infrastructure investment must be designed to serve overlooked stakeholders, such as marginalized communities, the environment, future generations and wildlife. Demonstrating benefits that respectfully address citizen concerns improves buy-in as they can better appreciate the net benefit to their community, and how potential risks can be mitigated.
Assembling Lifecycle Impact Data
A key issue in applying such a broad array of factors has been the lack of peer-reviewed methodologies and data. OTNA is leading a collaborative research initiative with its academic partners at the University of Tennessee’s Institute for a Secure and Sustainable Environment to gather researchers’ prior work on these factors. OTNA’s Land Freight Impact Project will inventory the assembled dataset of lifecycle impacts of truck and rail transportation and build a user-friendly online tool for stakeholders to use throughout a project’s lifecycle, from grant development to the ongoing/final assessments of the completed project.
Current Benefit Cost Analysis guidelines are useful for supporting the identification of projects with the community and environment in mind; however, they are only a starting point. The recession will subside, and in its wake will be the foundation of the next cycle of economic growth. This foundation should spring out of the best methods for value assessment and capital allocation.
The business case for the future of North America’s trade and transport network should be best-in-class, as too much is at stake to not select the most inclusive and efficient projects for funding and development. The future of the U.S. infrastructure and economy demands that we seriously consider improving the decision-making framework to meet the needs of today and tomorrow.